Abstract
This paper explores the effect of the presence of powerful CEOs on the quality of their workplace and finds that firms with powerful CEOs invest less in labor-friendly programs and that this does not significantly affect firm value. However, the effect is attenuated for firms in some industries such as those that are highly competitive, those with a high level of innovation intensity, and those with high labor bargaining power. Policies emphasizing friendliness toward employees in highly competitive industries, in innovation-intensive industries, and in union-intensive industries are found to enhance firm value. Our study thus underscores the importance of industry heterogeneity in understanding the relationship between CEO power and labor-friendly policy.
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